The Japanese yen fell in Asian trading on Wednesday against a basket of major and minor currencies, extending its losses for the fifth consecutive session against the US dollar and hitting an eight-month low. The currency remains under pressure from continued selling amid mounting concerns over Prime Minister-elect Sanae Takaichi’s expected economic policies.

Following her victory as leader of Japan’s ruling Liberal Democratic Party (LDP), Takaichi — who is set to become the country’s next prime minister — pledged to stimulate Japan’s economy through aggressive fiscal spending while criticizing the Bank of Japan’s recent rate hikes.

Price Overview

• USD/JPY: The dollar rose 0.5% to ¥152.65 — its highest level since February — from an opening price of ¥151.90, after touching a low of ¥151.74.

• On Tuesday, the yen closed down roughly 1.05% against the dollar, marking its fourth consecutive daily loss amid heightened political developments in Japan.

Sanae Takaichi

Takaichi’s weekend victory in the LDP leadership race — making her Japan’s first female prime minister in modern history — has sparked widespread debate among investors regarding her upcoming economic agenda.

A close ally of the late Shinzo Abe, Takaichi is known for supporting the stimulus-heavy policies that defined “Abenomics.” This reinforces expectations that her administration may adopt an expansionary approach favorable for Japanese equities but potentially negative for the yen, as it would likely extend the era of ultra-loose monetary policy.

She reiterated her commitment to boosting the economy through large-scale fiscal spending and repeated her criticism of the Bank of Japan’s decision to raise interest rates.

Interest Rate Outlook

• Following Takaichi’s win, market pricing for a 25-basis-point rate hike at the Bank of Japan’s October meeting dropped from 60% to 25%.

• Yen swap markets now imply a 41% chance of a rate hike by December — down from 68% before the LDP leadership election.

Market Commentary

• Lou Brien, strategist at DRW Trading in Chicago, said: “There will be a period of adjustment as investors try to gauge how Takaichi’s policies will affect the currency.”

• Mohammed Al-Sarraff, foreign-exchange researcher at Danske Bank, noted: “The Bank of Japan may hold rates steady this month as a precaution, but by December it will likely have more data — and I expect another hike then.”

• He added: “Inflation remains too high, interest rates are still too low, and the rationale for another rate increase this year persists.”

The Reserve Bank of New Zealand (RBNZ) announced its interest rate decision on Wednesday morning following its October 8 meeting, cutting the official cash rate by 50 basis points to a range of 2.50% — the lowest level since July 2022. The move exceeded market expectations, which had projected a 25-basis-point cut, marking the eighth rate reduction since the central bank began its monetary-easing cycle in August 2024.

The RBNZ stated that its Monetary Policy Committee “remains open to further reductions in the official cash rate as needed to ensure inflation stabilizes sustainably near the 2% midpoint of the target range over the medium term.”

• This statement is considered bearish for the New Zealand dollar.

Ethereum prices declined on Tuesday as traders engaged in profit-taking, even as demand for most risk assets remained strong due to continued inflows into exchange-traded funds (ETFs).

Market sentiment was dampened after the US Senate failed for the fifth time to pass a bill extending government funding through November 21.

Republicans still need the backing of at least eight Democrats to reach the 60-vote threshold required to approve legislation allowing federal funding.

As a result, US President Donald Trump criticized congressional Democrats in a post on Truth Social, saying he was willing to work with them on healthcare and other issues — provided they agree to reopen the government.

Meanwhile, investors continue to expect a 25-basis-point rate cut at the Federal Reserve’s upcoming policy meeting on October 28–29, followed by another similar reduction in December.

Ethereum

As of 20:30 GMT, Ethereum dropped 5.2% to $4,464.8 on CoinMarketCap.

Gold prices rose during Tuesday’s trading session, hitting a new all-time high amid continued central bank and ETF buying, as well as strong safe-haven demand fueled by the ongoing US government shutdown and expectations of Federal Reserve rate cuts.

Market sentiment weakened after the US Senate failed for the fifth time to pass a bill that would fund the government through November 21.

Republicans still need the support of at least eight Democrats to reach the 60-vote threshold required to approve legislation allowing federal funding.

As a result, US President Donald Trump criticized congressional Democrats in a post on Truth Social, saying he was ready to work with them on healthcare or other issues — provided that they agree to reopen the government.

The precious metal has gained 51% since the start of the year, supported by a combination of factors — most notably expectations of Fed rate cuts, central bank purchases, inflows into gold-backed ETFs, and a weaker dollar.

Investors currently expect a 25-basis-point rate cut at the Federal Reserve’s policy meeting scheduled for October 28–29, with another similar cut anticipated in December.

Meanwhile, the US Dollar Index rose 0.5% to 98.5 points as of 20:04 GMT, after touching a high of 98.5 and a low of 98.09.

As for trading levels, spot gold climbed 0.7% to $4,004.8 per ounce at 20:05 GMT.